Record September Year-to-Date Revenue at Six Flags

Deferred Revenue Up 21 Percent and Active Pass Base Up 13 Percent at End
of September

October 25, 2017 07:00 AM Eastern Daylight Time

GRAND PRAIRIE, Texas--(BUSINESS WIRE)--Six Flags Entertainment Corporation (NYSE: SIX), the world’s largest
regional theme park company, today announced revenue for the quarter
ended September 30, 2017 was $580 million, an increase of $23 million or
4 percent compared to the same period in 2016. The increase was
primarily driven by a 3 percent growth in attendance to 12.9 million
guests, a 2 percent increase in guest spending per capita and a 23
percent increase in international licensing revenue, partially offset by
decreases in sponsorship and accommodations revenue.

Net income increased $79 million or 77 percent and diluted earnings per
share increased 94 percent to $2.11 for the quarter, primarily due to a
reduction in stock-based compensation expense. Adjusted EBITDA1
in the third quarter increased $2 million or 1 percent to $301 million
compared to the prior-year period.

The financial performance of the company was negatively impacted by
several major natural events during the quarter. Hurricane Harvey
negatively impacted attendance at three of the company’s parks during
the last weekend of August and the week prior to Labor Day weekend, and
subsequent gas shortages across Texas continued to affect attendance for
several weeks. Remnants of the storm negatively affected attendance at
several more parks over the holiday weekend as the storm moved
northeast. Subsequently, Hurricane Irma impacted the company’s Atlanta
and East Coast parks. Finally, the earthquakes around Mexico City
severely disrupted the region and caused damage to the company’s new
water park, which was closed due to damage and likely will not reopen
until near the end of 2017.

“I am very proud of our team for this quarter’s performance given the
unprecedented natural events affecting park attendance, especially
following the adverse weather conditions we experienced in the second
quarter,” said Jim Reid-Anderson, Chairman, President and CEO. “We are
nicely positioned to deliver another record year for our shareholders in
2017, and our industry-leading team is laser-focused on executing our
strategy of higher ticket yields, improved in-park revenue, attractive
international licensing deals, new waterparks, and strong execution to
achieve our aspirational goal of $750 million of Modified EBITDA2
by 2020.”

Total guest spending per capita for the third quarter was $42.94, an
increase of $0.71 or 2 percent compared to the third quarter of 2016, as
ticket price gains were partially offset by lower in-park spending per
capita. Admissions per capita increased 4 percent to $25.63 and in-park
spending per capita decreased 1 percent to $17.31.

For the first nine months of 2017, revenue was $1.10 billion, a 2
percent increase versus the same prior-year period, driven primarily by
a 2 percent increase in attendance and a 31 percent increase in
international licensing revenue, offset by decreases in sponsorship and
accommodations revenue. Net income increased $59 million or 51 percent
driven by a reduction in stock-based compensation expense. Adjusted
EBITDA increased $1 million to $432 million. Foreign currency
translation had minimal impact on year-to-date results.

The softer than anticipated financial performance through the first nine
months of the year makes partial achievement of Project 600 in 2017 more
challenging and, in accordance with accounting standards, is no longer
deemed probable. Therefore, in the third quarter the company reversed
$45 million of stock-based compensation expense to reflect an expected
late achievement of the Project 600 Performance Award in 2018.

Attendance at the company’s parks for the first nine months of 2017 grew
2 percent to 24.3 million guests, while guest spending per capita was
essentially flat at $42.55 compared to the prior-year period.

These guest spending per caps were driven by admissions per capita
increasing 1 percent to $24.88 and in-park spending per capita
decreasing 2 percent to $17.67.

The Active Pass Base, which represents the total number of guests who
have a season pass or who are enrolled in the company’s membership
program, increased 13 percent year-over-year as a result of the
company’s continued success in marketing its multi-visit passes to
guests. Deferred revenue of $179 million, a record for the third
quarter, increased by $31 million or 21 percent over September 30, 2016,
primarily due to incremental sales of season passes, memberships and
all-season dining passes.

In the first nine months of 2017, the company invested $117 million in
new capital projects, paid $168 million in dividends, or $0.64 per
common share per quarter, and repurchased $499 million or 8.4 million
shares of its common stock. The authorized share repurchase amount
available as of September 30, 2017, was $343 million.

Net Debt3 as of September 30, 2017, calculated as total
reported debt of $2.02 billion less cash and cash equivalents of $83
million, was $1.94 billion, representing a net leverage ratio of 3.8
times Adjusted EBITDA.

Conference Call

At 8:00 a.m. Central Time today, October 25, 2017, the company will host
a conference call to discuss its third quarter 2017 financial
performance. The call is accessible through either the Six Flags
Investor Relations website at investors.sixflags.com
or by dialing 1-855-889-1976 in the United States or +1-937-641-0558
outside the United States and requesting the Six Flags earnings call. A
replay of the call will be available by dialing 1-855-859-2056 or
+1-404-537-3406 through November 2, 2017 and requesting conference ID
1772357.

About Six Flags Entertainment Corporation

Six Flags Entertainment Corporation is the world’s largest regional
theme park company with $1.3 billion in revenue and 20 parks across the
United States, Mexico and Canada. For 56 years, Six Flags has
entertained millions of families with world-class coasters, themed
rides, thrilling water parks and unique attractions. For more
information, visit www.sixflags.com.

Forward-Looking Statements

The information contained in this release, other than historical
information, consists of forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. These statements may involve risks and uncertainties that
could cause actual results to differ materially from those described in
such statements. These risks and uncertainties include, among others,
(i) the adequacy of cash flows from operations, available cash and
available amounts under our credit facilities to meet our future
liquidity needs, (ii) our ability to roll out our capital enhancements
in a timely and cost effective manner, (iii) our ability to improve
operating results by implementing strategic cost reductions, and
organizational and personnel changes without adversely affecting our
business, (iv) our operations and results of operations, and (v) the
risk factors or uncertainties listed from time to time in the company’s
filings with the Securities and Exchange Commission ("SEC"). In
addition, important factors, including factors impacting attendance,
such as local conditions, natural disasters, contagious diseases,
events, disturbances and terrorist activities; recall of food, toys and
other retail products sold at our parks; risk of accidents occurring at
the company’s parks or other parks in the industry and adverse publicity
concerning our parks or other parks in the industry; inability to
achieve desired improvements and our aspirational financial performance
goals; adverse weather conditions such as excess heat or cold, rain and
storms; general financial and credit market conditions; economic
conditions (including customer spending patterns); changes in public and
consumer tastes; construction delays in capital improvements or ride
downtime; competition with other theme parks and other entertainment
alternatives; dependence on a seasonal workforce; unionization
activities and labor disputes; laws and regulations affecting labor and
employee benefit costs, including increases in state and federally
mandated minimum wages, and healthcare reform; pending, threatened or
future legal proceedings and the significant expenses associated with
litigation; cyber security risks and other factors could cause actual
results to differ materially from the company’s expectations. Although
the company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that
such expectations will be realized and actual results could vary
materially. Reference is made to a more complete discussion of
forward-looking statements and applicable risks contained under the
captions "Cautionary Note Regarding Forward-Looking Statements" and
"Risk Factors" in the company’s Annual and Quarterly Reports on Forms
10-K and 10-Q, and its other filings and submissions with the SEC, each
of which are available free of charge on the company’s investor
relations website at investors.sixflags.com
and on the SEC’s website at www.sec.gov.

Footnotes

(1)

See the following financial statements and Note 3 to those financial
statements for a discussion of Adjusted EBITDA (a non-GAAP financial
measure) and its reconciliation to net income (loss).

(2)

See the following financial statements and Note 3 to those financial
statements for a discussion of Modified EBITDA (a non-GAAP financial
measure) and its reconciliation to net income (loss).

(3)

Net Debt (a non-GAAP financial measure) represents total long-term
debt as reported, including current portion, and any short-term bank
borrowings, less cash and cash equivalents.

We prepare our financial statements in accordance with United States
generally accepted accounting principles ("GAAP"). In our press release,
we make reference to non-GAAP financial measures including Modified
EBITDA, Adjusted EBITDA and Adjusted Free Cash Flow. The definition for
each of these non-GAAP financial measures is set forth below in the
notes to the reconciliation tables. We believe that these non-GAAP
financial measures provide important and useful information for
investors to facilitate a comparison of our operating performance on a
consistent basis from period to period and make it easier to compare our
results with those of other companies in our industry. We use these
measures for internal planning and forecasting purposes, to evaluate
ongoing operations and our performance generally, and in our annual and
long-term incentive plans. By providing these measures, we provide our
investors with the ability to review our performance in the same manner
as our management.

However, because these non-GAAP financial measures are not determined in
accordance with GAAP, they are susceptible to varying calculations, and
not all companies calculate these measures in the same manner. As a
result, these non-GAAP financial measures as presented may not be
directly comparable to a similarly titled non-GAAP financial measure
presented by another company. These non-GAAP financial measures are
presented as supplemental information and not as alternatives to any
GAAP financial measures. When reviewing a non-GAAP financial measure, we
encourage our investors to fully review and consider the related
reconciliation as detailed below.

The following table sets forth a reconciliation of net income to
Adjusted EBITDA for the three, nine and twelve months ended
September 30, 2017 and September 30, 2016:

Three Months Ended

Nine Months Ended

Twelve Months Ended

(Amounts in thousands)

September 30,2017

September 30,2016

September 30,2017

September 30,2016

September 30,2017

September 30,2016

Net income

$

200,930

$

121,694

$

215,013

$

154,859

$

216,881

$

157,043

Income tax expense

98,665

55,651

97,128

72,850

100,817

59,168

Other expense (income), net

375

1,318

40

2,009

(285

)

2,311

Loss on debt extinguishment

—

—

37,109

2,377

37,667

2,377

Interest expense, net

25,721

21,166

73,878

60,814

94,936

79,986

Loss on disposal of assets

2,010

799

4,337

913

5,392

6,571

Amortization

571

653

1,870

1,954

2,519

2,607

Depreciation

27,962

26,740

80,776

77,391

107,675

105,424

Stock-based compensation

(35,740

)

89,994

(39,055

)

96,244

(18,960

)

115,959

Impact of Fresh Start valuation adjustments (2)

10

22

29

66

52

107

Modified EBITDA (3)

320,504

318,037

471,125

469,477

546,694

531,553

Third party interest in EBITDA of certain operations (4)

(19,605

)

(19,212

)

(39,210

)

(38,425

)

(39,210

)

(38,425

)

Adjusted EBITDA (3)

$

300,899

$

298,825

$

431,915

$

431,052

$

507,484

$

493,128

Weighted-average common shares outstanding — basic:

84,480

92,204

87,676

92,538

88,711

92,336

The following table sets forth a reconciliation of net cash provided by
operating activities to Adjusted Free Cash Flow for the three, nine and
twelve months ended September 30, 2017 and September 30, 2016:

Three Months Ended

Nine Months Ended

Twelve Months Ended

(Amounts in thousands)

September 30,2017

September 30,2016

September 30,2017

September 30,2016

September 30,2017

September 30,2016

Net cash provided by operating activities

$

246,790

$

236,176

$

379,656

$

374,754

$

468,137

$

463,106

Changes in working capital

40,949

58,679

7,186

24,667

(28,628

)

(17,373

)

Interest expense, net

25,721

21,166

73,878

60,814

94,936

79,986

Income tax expense

98,665

55,651

97,128

72,850

100,817

59,168

Amortization of debt issuance costs

(960

)

(1,173

)

(3,101

)

(3,331

)

(4,273

)

(4,398

)

Other expense (income), net

979

(745

)

2,354

203

4,811

(6,601

)

Interest accretion on notes payable

(333

)

(90

)

(723

)

(322

)

(814

)

(439

)

Changes in deferred income taxes

(91,317

)

(51,649

)

(85,282

)

(60,224

)

(88,344

)

(42,003

)

Impact of Fresh Start valuation adjustments (2)

10

22

29

66

52

107

Third party interest in EBITDA of certain operations (4)

(19,605

)

(19,212

)

(39,210

)

(38,425

)

(39,210

)

(38,425

)

Capital expenditures

(19,348

)

(20,219

)

(116,548

)

(100,914

)

(144,572

)

(123,892

)

Cash paid for interest, net

(29,850

)

(26,746

)

(76,676

)

(63,401

)

(82,090

)

(70,889

)

Cash taxes (5)

(5,320

)

(3,327

)

(11,179

)

(14,000

)

(14,446

)

(20,436

)

Adjusted Free Cash Flow (6)

$

246,381

$

248,533

$

227,512

$

252,737

$

266,376

$

277,911

Weighted-average common shares outstanding — basic:

84,480

92,204

87,676

92,538

88,711

92,336

(1)

Revenues and expenses of international operations are converted into
U.S. dollars on an average basis as provided by GAAP.

(2)

Amounts recorded as valuation adjustments and included in
reorganization items for the month of April 2010 that would have
been included in Modified EBITDA and Adjusted EBITDA, had fresh
start accounting not been applied. Balance consists primarily of
discounted insurance reserves that will be accreted through the
statement of operations each quarter through 2018.

(3)

“Modified EBITDA,” a non-GAAP measure, is defined as our
consolidated income (loss) from continuing operations: excluding
the cumulative effect of changes in accounting principles,
discontinued operations gains or losses, income tax expense or
benefit, restructure costs or recoveries, reorganization items
(net), other income or expense, gain or loss on early
extinguishment of debt, equity in income or loss of investees,
interest expense (net), gain or loss on disposal of assets, gain
or loss on the sale of investees, amortization, depreciation,
stock-based compensation, and fresh start accounting valuation
adjustments. Modified EBITDA as defined herein may differ from
similarly titled measures presented by other companies. Management
uses non-GAAP measures for budgeting purposes, measuring actual
results, allocating resources and in determining employee
incentive compensation. We believe that Modified EBITDA provides
relevant and useful information for investors because it assists
in comparing our operating performance on a consistent basis,
makes it easier to compare our results with those of other
companies in our industry as it most closely ties our performance
to that of our competitors from a park level perspective and
allows investors to review performance in the same manner as our
management.

"Adjusted EBITDA," a non-GAAP measure, is defined as Modified
EBITDA minus the interests of third parties in the Adjusted EBITDA
of properties that are less than wholly owned (consisting of Six
Flags Over Georgia, Six Flags White Water Atlanta and Six Flags
Over Texas). Adjusted EBITDA is approximately equal to “Parent
Consolidated Adjusted EBITDA” as defined in our secured credit
agreement, except that Parent Consolidated Adjusted EBITDA
excludes Adjusted EBITDA from equity investees that is not
distributed to us in cash on a net basis and has limitations on
the amounts of certain expenses that are excluded from the
calculation. Adjusted EBITDA as defined herein may differ from
similarly titled measures presented by other companies. Our board
of directors and management use Adjusted EBITDA to measure our
performance and our current management incentive compensation
plans are based largely on Adjusted EBITDA. We believe that
Adjusted EBITDA is frequently used by all our sell-side analysts
and most investors as their primary measure of our performance in
the evaluation of companies in our industry. In addition, the
instruments governing our indebtedness use Adjusted EBITDA to
measure our compliance with certain covenants and, in certain
circumstances, our ability to make certain borrowings. Adjusted
EBITDA, as computed by us, may not be comparable to similar
metrics used by other companies in our industry.

(4)

Represents interests of third parties in the Adjusted EBITDA of Six
Flags Over Georgia, Six Flags Over Texas and Six Flags White Water
Atlanta.

(5)

Based on our current federal net operating loss carryforwards, we
believe we will continue to pay minimal amounts for cash taxes for
the next two years. Cash taxes paid represents statutory taxes paid,
primarily driven by Mexico and state level obligations.

(6)

Management uses Adjusted Free Cash Flow, a non-GAAP measure, in its
financial and operational decision making processes, for internal
reporting, and as part of its forecasting and budgeting processes as
it provides additional transparency of our operations. Management
believes that Adjusted Free Cash Flow is useful information to
investors regarding the amount of cash that we estimate that we will
generate from operations over a certain period. Management believes
the presentation of this measure will enhance the investors' ability
to analyze trends in the business and evaluate the Company's
underlying performance relative to other companies in the industry.
A reconciliation from net cash provided by operating activities to
Adjusted Free Cash Flow is presented in the table above. Adjusted
Free Cash Flow as presented herein may differ from similarly titled
measures presented by other companies.